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Heritage Foods is a growth stock to keep your eyes on

02-06-2015 • About Heritage Foods ($HERITGFOOD) • By InTwits

Have you thought about Heritage Foods as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Heritage Foods showed fast growth in the last financial year. The company's revenue surged on 20.4% in FY2015. Together with revenue growth Heritage Foods also managed to keep EBITDA growth. EBITDA grew -14.2% for the same period.

In the longer period the company showed fast revenue growth of 14.2% from FY2012 to FY2015 annually. EBITDA surged on 16.9% from FY2012 to FY2015 annually.

Heritage Foods ($HERITGFOOD) financials for the last 5 years

mln. INR FY2011 FY2012 FY2013 FY2014 FY2015
Revenue10,96113,93416,01817,22020,730
Revenue growth, %27.1%15.0%7.5%20.4%
SG&A, %
EBITDA3605131,024956820
EBITDA growth, %42.5%99.7%-6.7%-14.2%
EBITDA margin, %3.28%3.68%6.39%5.55%3.96%
Net Income1192499453284
Net Income margin, % 0.101%0.660%3.12%2.63%1.37%
 
CAPEX307293307642512
CAPEX/Revenue, %2.80%2.10%1.92%3.73%2.47%
Debt1,5421,4041,2631,4131,574
Cash282288317438400
Net Debt/EBITDA3.5x2.2x0.9x1.0x1.4x
 
ROIC, %5.9%11.7%29.6%22.4%13.5%
ROE, %1.3%10.3%42.6%28.3%15.3%

Profitability and return on investment


EBITDA margin declined slightly from 5.60% in FY2014 to 4% in FY2015. In the last 3 years the company's EBITDA margin increased on 0.300 pp from 3.70% in FY2012 to 4% in FY2015.

Heritage Foods shows attractive ROIC at 13.5% for the last 12 months which assumes stable development model. During the last three years it surged - it was 11.7% in FY2012. It's average level of ROIC for the last three years was 21.8%.

The company showed big decline in Net Income margin of 1.20 pp from 2.60% to 1.40% in FY2015. In the last 3 years Net Income margin surged on 0.700 pp from 0.700% in FY2012 to 1.40% in FY2015.

Heritage Foods operates at ROE of 15.3%. For the last three years the average ROE was 28.7%.

Capital expenditures (CAPEX)


Heritage Foods's CAPEX/Revenue was 2.47% in FY2015. CAPEX/Revenue surged on 0.368 pp from 2.10% in FY2012 to 2.47% in FY2015. It's average CAPEX/Revenue for the last three years was 2.70%.

Leverage (Debt)


Heritage Foods has medium debt level at 1.4x Net Debt/EBITDA to maintain high growth. In the last 3 years leverage dropped on 0.74x from 2.17x in FY2012 to 1.43x in FY2015.

Valuation vs. comparable companies


At the end of trading day today Heritage Foods traded at 12.4x EV/EBITDA which is 11% lower than 13.9x Packaged Foods peer group avearge calculated on the basis of 72 companies. The market closed today at 31.7x P/E for Heritage Foods which is 49.1% lower than 62.3x Packaged Foods peer group avearge calculated on the basis of 10 companies.

Peers in Packaged Foods


Below we provide Heritage Foods benchmarking against other companies in Packaged Foods industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Krbl ($KRBL)-2.2%5.6%27.6%39.9%
Sunil Agro Foods ($SUNILAGR)-34.2%1.6%38.3%29.1%
Milkfood ($MLKFOOD)-29.8%-1.1%9.3%27.7%
Simran Farms ($SIMRAN)-69.5%38.4%23.8%27.5%
Venky'S (India) ($VENKYS)-61.1%18.0%46.0%24.8%
 
Median (15 companies)-35.3%14.7%14.8%16.0%13.8%
Heritage Foods ($HERITGFOOD)27.1%15.0%7.5%20.4%


Top companies by EBITDA margin, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Glaxosmithkline Consumer Healthcare ($GSKCONS)18.8%18.6%17.8%22.5%17.2%
Nestle India ($NESTLEIND)20.5%22.0%21.7%20.9%
Krbl ($KRBL)14.7%14.1%14.2%15.1%
Vadilal Industries ($VADILALIND)10.1%19.8%11.6%11.2%
Britannia Industries ($BRITANNIA)5.2%5.7%6.9%9.2%11.1%
 
Median (12 companies)7.7%8.0%8.7%8.7%8.8%
Heritage Foods ($HERITGFOOD)3.3%3.7%6.4%5.6%4.0%


Top companies by CAPEX/Revenue, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Venky'S (India) ($VENKYS)6.4%8.9%6.6%10.4%
Krbl ($KRBL)5.8%4.1%4.0%6.1%
Vadilal Industries ($VADILALIND)20.1%12.2%9.4%5.9%
Adf Foods ($ADFFOODS)21.8%1.9%18.3%5.8%
Glaxosmithkline Consumer Healthcare ($GSKCONS)3.6%2.7%4.3%2.5%
 
Median (9 companies)3.6%4.1%4.2%4.3%2.5%
Heritage Foods ($HERITGFOOD)2.8%2.1%1.9%3.7%2.5%


Top companies by ROIC, %

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Britannia Industries ($BRITANNIA)17.8%24.6%33.7%54.0%59.4%
Nestle India ($NESTLEIND)85.4%57.7%47.9%49.6%
Kse ($KSE)14.7%27.7%14.1%36.9%
Umang Dairies ($UMANGDAIR)54.8%93.5%55.6%22.3%28.4%
Krbl ($KRBL)14.4%11.7%14.5%18.3%
 
Median (19 companies)13.1%12.3%10.9%20.3%36.2%
Heritage Foods ($HERITGFOOD)5.9%11.7%29.6%22.4%13.5%


Top companies by Net Debt / EBITDA

 FY2011 FY2012 FY2013 FY2014 FY2015
Top 5
Venky'S (India) ($VENKYS)0.9x2.6x2.8x6.7x
Vadilal Industries ($VADILALIND)5.8x2.6x4.5x3.9x
Bambino Agro Industries ($BAMBINO)3.1x3.2x3.2x
Krbl ($KRBL)3.7x4.1x2.9x3.0x
Umang Dairies ($UMANGDAIR)1.8x0.6x0.5x1.7x1.1x
 
Median (12 companies)2.2x1.7x1.1x0.9x-0.0x
Heritage Foods ($HERITGFOOD)3.5x2.2x0.9x1.0x1.4x


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